The 21st century is characterised by the Fourth Industrial Revolution (4IR), which has brought forth a wave of advanced technologies transforming economic and social systems worldwide. As a result, the nature of business competition has shifted from traditional models toward digitally driven dynamics (Koe & Sakir, 2020). In this increasingly digital environment, enterprises are becoming more reliant on information technologies to maintain competitiveness and ensure sustainable growth  (Mthembu, Kunene, & Mbhele, 2018).

E-commerce, a rapidly evolving field underpinned by information technology, has emerged as a strategic tool enabling businesses in developing countries to enhance GDP growth and compete more effectively on a global scale  (Kabir, M, J, M, & R, 2020). The United Nations Conference on Trade and Development’s (UNCTAD) initiative eTrade for All (2016) highlights the critical contribution of digital economies—especially e-commerce—to achieving Sustainable Development Goals (SDGs) such as SDG 5 (gender equality and women’s empowerment), SDG 8 (inclusive and sustainable economic growth), SDG 9 (resilient infrastructure, industrialisation, and innovation), and SDG 17 (global partnerships for sustainable development).

Koe and Sakir define e-commerce as the conduct of commercial transactions through digital platforms, particularly the internet. At the micro level, e-commerce enables businesses to expand operations, increase revenue, and access international markets. At the macro level, it serves as a catalyst for economic development—particularly for emerging economies. Therefore, the adoption of e-commerce is becoming an increasingly strategic priority for businesses seeking to remain competitive and resilient in a digitally driven global economy. (Koe & Sakir, 2020)

Research on e-commerce adoption in developing countries has examined a range of influencing factors. These include technological dimensions, e.g., electronic payment infrastructure (Kabir, M, J, M, & R, 2020), logistics networks (Ahmed & Hasan, 2016), organisational aspects, e.g., leadership support, managerial attitudes (Ahmed & Hasan, 2016), (Sila, 2019), (Lekmat, 2018), IT capabilities (Koe & Sakir, 2020), e-commerce competency (Alyoubi, 2015) and environmental conditions, e.g., government policies and initiatives (Rondovic, Djurickovic, & Kascelan, 2019), (Lekmat, 2018), competitive pressures (Kurnia, Choudrie, Mahbubur, & Alzagooul, 2015), (Sila, 2019), consumer readiness (Alyoubi, 2015), consumer confidence in product quality (Chawla & Kumar, 2020), online payment tools (Agarwal, 2015), performance perspective (Lekmat, 2018), (Hendricks & Mwapwele, 2023). Numerous studies have analysed these factors using various theoretical frameworks such as the Technology Acceptance Model (TAM), Theory of Reasoned Action (TRA), and Unified Theory of Acceptance and Use of Technology (UTAUT). However, the Technology–Organization–Environment (TOE) framework has emerged as one of the most comprehensive and widely applied models in this field (Hendricks & Mwapwele, 2023).

As a developing country, Mongolia holds significant potential to harness e-commerce as a means to expand business operations, increase sales, access international markets, gain competitive advantage, and ultimately stimulate economic growth. However, scientific research on this topic within the Mongolian context remains scarce, with only a few exceptions. For instance, Oyungerel D., Munkhtuya Ts., Erdenetuya N., and Ganbat Ts. (Oyungerel.D, Munkhtuya.Ts, Erdenetuya.N, & Ganbat.Ts, 2019) conducted a study on the “Current State of E-commerce in Mongolia: Payment Systems and Delivery,” while Urandelger G., Burmaa S., and Avirmed D. (Urandelger.G, Burmaa.S, & Avirmed.D, 2021) examined consumer readiness for engaging in e-commerce.

To address this research gap, the present study investigates the organizational, technological, and environmental factors that affect e-commerce adoption by businesses in Mongolia, using the TOE framework. The study seeks to identify the challenges businesses face during the transition to e-commerce and to assess the relative influence of various internal and external factors. The next section outlines the theoretical background underpinning the study, followed by the methodology and results of the empirical analysis.

Theoretical Background

Researchers have employed various theoretical frameworks—such as the Technology–Organization–Environment (TOE) model, the Technology Acceptance Model (TAM), the Theory of Reasoned Action (TRA), and the Unified Theory of Acceptance and Use of Technology (UTAUT)—to explore the key determinants influencing the adoption of e-commerce by businesses. Among these, the TOE framework has been the most widely applied (Hendricks & Mwapwele, 2023). The TOE model was introduced by (Tornatzky, 1990) to examine the organizational adoption of technological innovations. The model identifies three dimensions that influence technology adoption within an organization: technological factors, organizational factors, and environmental factors.

Organizational factors typically include indicators such as organizational size, centralization and complexity of managerial structures, human resources, and the availability of slack resources. Technological factors refer to both internal technologies currently utilized by the organization and external technologies available in the market. Environmental factors encompass the broader ecosystem in which the organization operates, including industry-specific dynamics, competitive pressures, resource availability, and government interactions (Kevin Zhu, 2002).

The TOE framework has been employed to explain a wide range of information systems applications, including inter-organizational systems, online business operations, open systems, and enterprise systems. While the core dimensions of the TOE model remain consistent, prior studies have interpreted and applied specific indicators within these dimensions in diverse ways depending on the context of the research and the nature of the organization studied (Kevin Zhu, 2002). The following subsections review relevant literature by TOE dimension.

Organisational Factors: Organisational factors refer to internal characteristics that influence an enterprise’s readiness and capacity to implement e-commerce. One such characteristic is organisational size, which often correlates with the ability to manage and allocate resources such as financial and human capital. Larger organisations typically have greater capacity to invest in and implement technological systems, including e-commerce platforms (Rita Rahayua, 2015).

Organisational conditions relate to the structure and internal processes of the enterprise, including coordination among employees, communication channels, and the availability of slack resources. Senior management plays a critical role in shaping these conditions—leaders who embrace innovation and align it with strategic goals create an environment conducive to technological adoption. The behaviours and attitudes of senior leaders can significantly influence how innovation is perceived and supported within an organisation. This includes articulating the strategic importance of innovation, motivating lower-level staff, encouraging both formal and informal innovation efforts, highlighting successful innovation cases, and assembling capable implementation teams. Tornatzky notes that organisational conditions form the internal environment that either facilitates or constrains the adoption of technological innovations (Tornatzky, 1990). Numerous studies confirm that organisational structure serves as a strong predictor of technology adoption (Deelert, 2020). For example, (Micheni, 2015) identifies several key components of organizational context, including size, innovativeness, organizational culture, and top management support.

Technological Factors: The rapid development of internet technologies continues to offer significant benefits to enterprises engaged in e-commerce. Technological factors generally encompass the organisation’s access to and ability to adopt relevant technologies, including perceived usefulness, compatibility, complexity, ease of use, control, security, and reliability.

Successful e-commerce adoption requires a well-developed technological infrastructure. Various elements—such as the complexity of the implementation process, organisational IT capacity, legislative compliance, and cybersecurity—are closely linked to the innovation process (Preethi, 2018). Technological factors include not only current technologies used by the organisation but also emerging external technologies not yet in use. Existing technologies within an organisation can limit the scope and speed of future innovation, making the assessment of technological readiness crucial (Collins, Hage , & M. Hull, 1988). Three types of innovations relevant to external technological environments are: incremental, synthetic, and disruptive innovations. Incremental innovations introduce new features or improvements to existing technologies and pose minimal risk or disruption to adopting firms. Examples include the transition from CRT monitors to LCD displays or the upgrade from one version of ERP software to another.

Researchers argue that the technological skills of employees represent more valuable intangible resources than physical assets. Skilled innovators can provide organisations with a competitive advantage. However, as digital communication technologies become increasingly complex, data security and privacy emerge as critical challenges. Security refers to the organisation’s capacity to protect user data and transaction information during digital exchanges. In many cases, privacy concerns lead individuals to limit or avoid internet usage. Studies confirm that security concerns remain one of the most significant barriers to the adoption of e-commerce technologies (Hart O. Awa, 2016).

Environmental Factors: Environmental factors play a crucial role in determining whether and how an organisation adopts e-commerce technologies. These factors are largely external and are typically distinguished from internal technological and organisational elements.

Environmental conditions include the role and support of government, competitive pressure, and broader socio-economic and cultural dynamics related to e-commerce adoption. They also encompass the institutional and regulatory environment surrounding the enterprise.

Tornatzky defines the external environment as the inter-organisational context in which a business operates (Tornatzky, 1990). Numerous studies conceptualise this external context through variables such as competitive pressure, industry and market demands, and partner influence. Some scholars treat these variables separately, while others combine them under the umbrella term «external pressure». Innovation suppliers and support partners are often regarded as key stakeholders in the external environment. These partners provide critical external support, which refers to the availability of resources or assistance that facilitate the implementation and adoption of innovation (Truc Nguyen, 2017).

Empirical Study

Research Methodology and Measurement. This empirical study aims to identify the factors influencing the adoption of e-commerce in business operations, with a particular focus on the role of organisational leadership, managerial support, internal resources, technological assets, industry-specific challenges, and government support.

The target population for this research includes Mongolian enterprises that either exclusively engage in e-commerce or have already integrated e-commerce strategies into their operations. The TOE framework, as applied in empirical research, varies in its use of specific variables under each of the three main dimensions: technology, organisation, and environment. Therefore, this study draws upon prior scholarly work on e-commerce adoption through the TOE lens to identify relevant constructs.

We designed a structured questionnaire comprising 33 measurement items grouped under six major factors:

• Performance of e-commerce-implementing organizations
• Technological factors (one construct)
• Environmental factors (two constructs: government support and sector-specific challenges)
• Organizational factors (two constructs: managerial support for online business and internal organizational resources necessary for e-commerce implementation)

The questionnaire was developed using a 5-point Likert scale. Detailed factor definitions and their associated items are presented in Table 1.

Table 1

Key Measurement Factors According to the TOE Framework

Sample Composition and Data Collection. According to National Statistics, there were 301 enterprises in Mongolia that had either adopted or were actively engaged in e-commerce. For this study, a convenience sampling approach was applied, resulting in the participation of 98 e-commerce enterprises during 2022 and 2023. Respondents were senior decision-makers within their organisations. The collected data were analysed using SPSS version 22.0.

Descriptive Statistics. Table 2 summarises the descriptive statistics for the participating organisations. Of the 98 respondents, 46.9% represented small enterprises (fewer than 9 employees), 28.6% medium-sized (10–19 employees), and 24.5% large enterprises (over 50 employees). Regarding years of operation, 70.4% had been operating for less than 10 years, 18.4% for 10–19 years, and 11.2% for more than 20 years. Notably, 51.0% considered e-commerce their primary business activity, while 49.0% used e-commerce as a supplementary channel.

Table 2

Descriptive statistics

In response to an open-ended question aimed at identifying pressing challenges, 61 organisations provided feedback. Table 3 summarises their responses.

Table 3

Reported Challenges (Multiple Mentions)

The most frequently cited (36%) challenge was consumer-related issues, including the need to educate consumers and enhance their digital literacy. This was followed by delivery and logistics problems (21%).

Validity and Reliability Analysis. To ensure methodological rigour, factor analysis was conducted to assess the construct validity and internal consistency of the measurement variables. Five main factors were identified, and the results are summarised in Table 4. Interestingly, the technological factor did not emerge as a distinct component in the factor analysis. Several potential reasons may explain this:

• Technological factors may have been subsumed under internal organizational aspects, such as resource availability, leadership support, or internal policies.
• The surveyed organizations might already be advanced adopters in their respective industries, having moved past the technological barriers—rendering technology less relevant as a differentiator.

Due to these considerations, the technological factor was excluded from subsequent analyses.

Table 4

Factor Analysis Results (Factor Loadings)

To confirm the consistency of the factor analysis, the Kaiser-Meyer-Olkin (KMO) and Bartlett’s Test of Sphericity were performed. The results were favourable, as shown in Table 5.

Table 5

KMO and Bartlett’s Test Results

Next, Cronbach’s Alpha test was conducted to evaluate the internal reliability of each factor. The results, shown in Table 6, indicate high reliability across all five dimensions. Given these findings, the collected survey data were deemed suitable for further statistical analysis.

Table 6

Reliability Analysis (Cronbach’s Alpha)

Results of Multivariate Regression Analysis. To assess the influence of each factor on organisational performance, mean scores for the five constructs were computed. Among them, organisational resources received the highest mean score (M = 3.78), while government support received the lowest (M = 1.45). The second-lowest was sector-specific challenges (M = 2.43). This suggests that respondents evaluated internal factors—such as performance, resources, and managerial support—more favourably than external environmental factors. Detailed results are presented in Table 7.

Table 7

Mean Scores and Standard Deviations by Factor

A correlation matrix was also created to evaluate the relationships between variables. As shown in Table 8, significant positive correlations were found among all five factors

Table 8

Pearson Correlation Coefficients

All correlations were significant at the 0.01 level (1-tailed).

Table 9

Multivariate Regression Results (Dependent Variable: Organizational Performance)

To further validate these findings, a multivariate analysis was conducted to assess the extent to which organisational resources, managerial support and attitude, industry-specific challenges, and government support influence the performance of e-commerce-implementing enterprises. As shown in Table 8, the results of the correlation analysis indicate strong interrelationships among these factors. Table 9 presents the results of the multivariate regression analysis, confirming that organisational resources and managerial support for e-commerce implementation—both of which are internal to the enterprise—have a significant and positive impact on performance. Although government support received the lowest average rating, the analysis shows that it has no statistically significant effect on organisational performance. In contrast, industry-specific challenges were found to exert a strong influence on organisational performance, based on the assessments of the surveyed respondents.

Conclusion

Research Conclusions and Significance.

This study examined the key determinants of e-commerce adoption among Mongolian businesses using the Technology–Organization–Environment (TOE) framework and empirical data collected from 98 enterprises. The objective was to assess how internal organisational capacities, external environmental conditions, and technological readiness influence enterprise performance in the context of digital transformation.

While both government support and industry-specific challenges emerged as identifiable environmental dimensions, their perceived influence differed notably. Government support received the lowest rating from respondents and was found to have no statistically significant impact on organisational performance. This outcome suggests either a lack of awareness among business operators regarding available governmental initiatives or a substantive gap in government involvement in the e-commerce sector. It also implies that the current level of public-sector engagement may not be sufficient to serve as a lever for firm-level performance enhancement.

By contrast, industry-specific challenges—including limitations in technological infrastructure, national payment systems, public digital literacy, and delivery networks—were found to significantly constrain enterprise performance. This highlights the need for systemic improvements across the e-commerce ecosystem in Mongolia.

From an internal perspective, organisational resources and managerial support had a strong and positive correlation with organisational performance. These findings reaffirm that internal capacities—such as human resources, financial and IT assets, and leadership commitment—are fundamental to successful digital adoption.

In sum, the study confirms that the primary drivers of e-commerce performance in Mongolia are internal organisational conditions, while external environmental enablers remain underdeveloped. The results have strong practical relevance for business owners, policymakers, and development actors seeking to strengthen digital transformation and competitiveness in emerging markets.

Research Limitations and Future Directions

This study also revealed that Mongolian e-commerce firms are commonly constrained by industry-level issues such as consumer readiness, delivery logistics, payment system reliability, and ICT capacity. These systemic issues necessitate coordinated action among industry stakeholders, even in a competitive market environment. The evidence supports the relevance of “coopetition” strategies—collaborative models among competitors aimed at overcoming shared challenges and accelerating industry-wide advancement.

Although government support was rated low and found statistically insignificant, the need for a more structured and transparent digital policy landscape remains clear. The findings suggest that while firms may currently succeed despite limited state support, public investment in infrastructure and regulation could substantially improve long-term digital outcomes.

Several limitations of this study present avenues for future research:

• The TOE framework, while robust, does not account for managerial characteristics such as strategic mindset, innovation orientation, or risk tolerance. Future studies could integrate behavioural or psychological variables to enrich understanding.
• The data is cross-sectional; longitudinal analysis could track shifts in e-commerce adoption patterns over time and in response to policy interventions.
• Comparative case studies between urban and rural enterprises, or between Mongolian and foreign e-commerce firms, could provide deeper insight into contextual differences.
• More granular focus on specific sub-sectors (e.g., food, apparel, services) could reveal industry-specific adoption dynamics.

Ultimately, e-commerce should not be seen merely as a technology upgrade, but as a strategic business transformation. As digital markets grow and globalise, Mongolian firms must be equipped with both internal readiness and external support mechanisms to fully leverage the benefits of e-commerce. This study serves as a foundational evidence base for designing future digital strategies, institutional policies, and business development programmes tailored to Mongolia’s evolving digital economy.